ExxonMobil and Chevron, the two largest American energy companies, have reported a decline in earnings for the first quarter of the year due to lower margins on oil refining and plummeting natural gas prices. Despite this, the oil and gas business remains highly profitable for both companies, even with moderate oil prices.
ExxonMobil reported earnings of $8.2 billion for the quarter, down from $11.4 billion a year earlier, while Chevron saw a decline to $5.5 billion from $6.6 billion. Both companies attributed the decrease in earnings to lower profitability from refining crude oil and falling natural gas prices.
The price of Brent crude oil, the international benchmark, has been on the rise in recent weeks and is currently just under $90 a barrel. If this upward trend continues, company earnings could see an increase. However, Brent crude is still selling for less than its 2022 peak when it surpassed $100 a barrel after Russia’s invasion of Ukraine.
One key point of contention between the two energy giants is their rivalry over the oil riches of Guyana. ExxonMobil has led the development of the Latin American country into a major new oil producer, but Chevron is looking to enter the market through a proposed acquisition of Hess, a company with a significant stake in Guyanese oil fields.
ExxonMobil is pushing back against Chevron’s entry into the lucrative Guyana market and is exploring the possibility of using a legal right to acquire the Hess stake in key oil fields. The uncertainty surrounding this potential merger has weighed on Chevron’s share price, with analysts calling the situation “the elephant in the room” for the company.
Both companies are confident in their positions, with ExxonMobil’s chairman and chief executive, Darren W. Woods, emphasizing the value they have created in Guyana and the importance of defending their rights. Chevron’s chairman and chief executive, Mike Wirth, expressed confidence that arbitration proceedings would rule in their favor regarding the potential acquisition of the Hess stake.
Overall, despite the challenges faced in the first quarter, both ExxonMobil and Chevron remain strong players in the energy industry, with their eyes set on future growth and profitability.
